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The Lopez Case: Has Germany Been Dragging Its Feet?


International Business: GERMANY

THE LOPEZ CASE: HAS GERMANY BEEN DRAGGING ITS FEET?

GM hopes a civil suit will embarrass prosecutors into action

To Louis R. Hughes, it was a clear warning to back off. Hughes, president of General Motors' international operations, says that in June, 1993, the retired CEO of a prominent German industrial company met with him briefly in a city in the German state of Hesse. The man carried a simple message from Ferdinand Piech, the Volkswagen chairman who had just hired away GM's ace cost-cutter, Jose Ignacio Lopez de Arriortua. As Hughes recalls, Piech's emissary cautioned that if the world's biggest carmaker pursued charges that Lopez and VW stole classified GM documents and trade secrets, Germany would protect VW.

The idea of a national conspiracy to shield VW from prosecution may seem far-fetched. But GM officials are increasingly suspicious that meddling politicians and bureaucratic foot-dragging has stalled Germany's wheels of justice. So on Mar. 7, frustrated with the lack of progress in a three-year-old criminal probe, GM filed a civil lawsuit against Lopez, Piech, and VW in U.S. District Court in Detroit. The goal is to wring some sort of damages out of VW for allegedly stealing GM secrets and prod German prosecutors back into action. The delays "bring into question the commitment of the German system to the rule of law," fumes David J. Herman, president of Adam Opel, GM's German subsidiary. A VW spokesman says the suit is unfounded and that GM's claims are "baseless."

GM's 100-page complaint details some pretty hot stuff. The document describes how Lopez, several close associates, and VW officials allegedly stole reams of information about confidential plans for new products, a radically different factory design, and procedures for buying parts. The civil suit was approved at a February meeting in Detroit involving Hughes, GM chief John F. Smith, and other executives.

The suit shows GM's iron determination to get its day in court. While the company claims it has mountains of concrete proof against Lopez, GM has made no formal complaint about possible foot-dragging by the Germans. Instead, GM officials are content to air their suspicions in the hopes of adding pressure on German prosecutors.

PLODDING REVIEW. That strategy makes sense for GM, since evidence of political interference is highly circumstantial. Take the case of politician and VW director Gerhard Schroder, one of Lopez' most outspoken defenders and a bête noire for GM executives. As minister president of the German state of Lower Saxony, which owns 20% of VW's common stock, Schroder wields plenty of power. On May 24, 1993, he said GM's pursuit of Lopez was "an attack on Germany as an industrial location" and an effort "to ruin VW." Inflammatory, yes. But such outbursts have no impact on investigators, says Hans-Hermann Eckert, senior public prosecutor in the Frankfurt Attorney General's office.

Likewise, at a press conference a year later, Schroder questioned the impartiality of the Darmstadt prosecutor's office, which was handling the Lopez investigation. In response, the case was reviewed by Senior Public Prosecutor Thomas Seifert, who painstakingly retraced each step of the year-old inquiry. Opel charges this process caused a delay of four months in the investigation. "This was a brazen attempt by a national political figure who has a personal interest in the outcome to influence the [legal] process," says Herman. Eckert denies such influence. Adds a Schroder spokesman: "They've been reading too many spy novels."

POLITICAL MEDDLING? Delays have been frequent, though. In February, 1995, Eckert told a news service that the probe would be concluded in three months. Then, in late May and early June, he said the decision had been pushed back to the fall. In August, he amended that to the end of the year. On Jan. 12, Eckert said a decision to indict or not will be reached within weeks, but won't be made public until the summer. As for the delays, Eckert says complex cases often take longer than expected.

The German delays may also be slowing a U.S. criminal probe. On Apr. 25, 1994, the U.S. Justice Dept. asked its German counterpart to share the results of German investigations into the Lopez affair. On Aug. 12, the German Justice Ministry approved the request and passed it to officials in Hesse handling the investigation. In October, the authorities asked U.S. officials to clarify their request for evidence. Then on Feb. 21, Lopez' lawyers filed an objection, and until a Frankfurt court rules on it, the issue is stalled. Justice officials in Bonn say such delays are normal.

German legal experts say the case's complexity may be partly responsible for the delays. But they also say the structure of the German legal system makes political meddling possible. State justice ministers, who are political appointees, can give orders to state district attorneys. Such directives, though, are unusual, says Klaus Tiedemann, a law professor at the University of Freiburg.

Piech desperately wants the whole legal mess to go away. Last month, he told the monthly Manager Magazin: "We have closed this matter." As long as GM keeps pressing its case, he's at least guilty of wishful thinking.By David Woodruff in Russelsheim, with Kathleen Kerwin in DetroitReturn to top


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